Contributions Committee’s Report Draws Mixed Reactions

as Delegates Consider Scale of Assessments

A range of viewpoints from delegates greeted the Chair of the Committee on Contributions today, as he presented the Fifth Committee (Administrative and Budgetary) with a review of the methodology for assessing Member States’ contributions to the United Nations expenses.

Bernardo Greiver, who heads the technical body charged with studying how the scale of assessments of contributions could be improved, outlined a number of the report’s recommendations, noting that the General Assembly had recognized that the methodology could be enhanced and that there was a need to study it in depth. On several issues, including the debt-burden adjustment, and revision of the low per capita income adjustment, divergent views remained, so the Contributions Committee, which conducted the review at its seventy-third session in June, had decided to continue analysing them.

Noting that changes in shares of gross national income (GNI) led to changes in relative capacities to pay, the report called for those changes to be reflected more accurately in the scale of assessments. To achieve that, it urged States to implement the System of National Accounts, which could better represent their GNI. Another of its recommendations related to the excessive fluctuation or distortion of GNI that was caused by some market exchange rates. It called for the use of conversion rates based on market exchange rates in the scale of assessments except where that caused excessive fluctuations or distortions in GNI.

Fiji’s representative, who spoke on behalf of the “Group of 77” developing countries and China, said the Group rejected any change to the elements of the current methodology used to prepare the scale of assessments that would increase developing countries’ contributions. Its position was made clear in a Ministerial Declaration of 26 September 2013 which emphasized that the current methodology reflected changes in the economic conditions of Member States and reaffirmed that the principle of “capacity to pay” was fundamental to apportioning the United Nations expenses.

He underlined that the core elements of the current methodology had to be maintained and were not negotiable. The “ceiling” had been introduced as a political compromise and was contrary to the principle of the capacity to pay. For the Group that was the fundamental source of distortion in the scale of assessments.

For the representative of the delegation of the European Union, however, the current methodology did not sufficiently account for shifting economic realties, most notably changes in Member States’ shares of world GNI that changed their relative capacity to pay. Recognizing that the Assembly had agreed that the methodology could be enhanced, he welcomed the Committee on Contributions’ review as a step towards that enhancement, and noted that improvements could lead to a more equitable distribution of Member States’ financial responsibility, according to their capacity to pay.

Japan’s representative held a similar view, calling for “a methodology that would better reflect each Member State’s real and current capacity to pay in a more equitable way”, based on the most current, comprehensive and comparable data available. As the second largest financial contributor to the Organization, Japan attached great importance to the issue of the scale of assessments, he said, adding that despite economic and financial difficulties, Japan had paid its dues faithfully.

Also today, Lionel Berridge, Chief of the Contributions and Policy Coordination Service, introduced the Secretary-General’s report on multi-year payment plans. He said the system provided Member States that were in arrears with a useful tool for reducing their unpaid assessed contributions, while also demonstrating their commitment to meeting their financial obligations to the United Nations. Since introduction of the system — which generally aimed to eliminate arrears within six years — six Member States had successfully implemented multi-year payment plans.

Several delegates took up that issue in relation to Member States currently in arrears and those that had recently requested exemption, urging those States to consider submission of multi-year payment plans in order to ensure that they honoured their commitments under the system.

Also speaking today was the representative of Malaysia.

The Fifth Committee will meet again at 10 a.m. on Monday, 7 October, to discuss the report on Office of Internal Oversight Services (OIOS) activities and the programme budget for the biennium 2012-2013 as it related to the United Nations Office for Partnerships, as well as to take action on a draft resolution relating to the scale of assessments.

Background

The Fifth Committee (Administrative and Budgetary) met this morning to consider the scale of assessments for the apportionment of the expenses of the United Nations. The Committee had before it the Report of the Committee on Contributions’ seventy-third session (3-21 June 2013) (document A/68/11) and the Secretary-General’s report on multi-year payment plans (document A/68/68).

Introduction of Reports

BERNARDO GREIVER, Chairman of the Committee on Contributions, introduced that body’s report, recalling that the scale of assessments for 2013-2015 had been adopted by the Assembly using the same methodology as the previous four scale periods. The Assembly had also begun looking towards future review of the scale methodology. The Assembly had noted that the current methodology reflected changes in the relative economic situations of Member States, also noting that changes in Member States’ shares in world Gross National Income (GNI) resulted in changes in relative capacities to pay, which should be more accurately reflected in the scale of assessments. It had recognized that the methodology could be enhanced and that there was a need to study it in depth. The Committee on Contributions had reviewed the methodology and made recommendations.

Addressing that review, he noted that “income measure” was the first approximation of capacity to pay. Changes in shares of world GNI led to changes in relative capacities to pay, and those changes should be more accurately reflected in the scale of assessments. Implementation by States of the System of National Accounts would result in better reflection of GNI in the scale of assessments. Some market exchange rates caused excessive fluctuation or distortion of GNI and the Committee on Contributions had recommended that conversion rates based on market exchange rates be used in the scale of assessments except where that would cause excessive fluctuations or distortions in GNI. In addition, base periods were used for averaging income data and the Committee agreed that there were advantages to using the same base period for as long as possible.

He said the Committee on Contributions had also considered during its seventy-third session the debt-burden adjustment, revision of the low per capita income adjustment, along with the maximum assessment rate, the maximum assessment rate for the least developed countries and the minimum assessment rate. In all cases, they decided that further study of those questions was needed.

No new multi-year payment plans had been submitted, he said, adding that the Committee on Contributions had reiterated its recommendation that the Assembly encourage States in arrears to consider submitting multi-year payment plans. The Assembly President had received five requests for exemption and the Committee on Contributions had stressed the need for States to submit the fullest possible information in support of such requests. States in arrears should try to make payments exceeding their current assessments to avoid further debt accumulation. All five of the States requesting exemptions were deemed to have failed to pay because of conditions beyond their control and the Committee on Contributions had recommended that they be permitted to continue to vote.

A request by Iraq to reduce its rate of assessment had also been considered, he said. No external debt information had been available for the Committee on Contributions’ review of the scale of assessments for 2013-2015, and at its latest session, the statistics for the year 2010 were reviewed. That data, the Committee on Contributions concluded, could be used for determining future scales of assessment but information for other years of the base period would also be needed. The Committee recalled that the scale of assessments, once fixed, would not be revised for at least three years unless it was clear that substantial changes had occurred to a State’s capacity to pay.

Noting that the State of Palestine had been accorded non-member observer State status, he noted that current assessment procedures for non-member States called for a flat annual fee percentage to be applied to a notional assessment rate based on income data. The flat annual fee applied to the Holy See was 50 per cent of the notional assessment, so applying the same procedure to the State of Palestine would result in a notional rate of 0.005 per cent of GNI.

LIONEL BERRIDGE, Chief, Contributions and Policy Coordination Service, introduced the Secretary-General’s report on multi-year payment plans (document A/68/68). When created, the system was considered a useful tool Member States could use to reduce unpaid assessed contributions and a way to let them demonstrate their commitment to meeting their financial obligations to the United Nations, he said. The plans should provide for annual payment of current-year assessments and a portion of the arrears. Where possible, they generally provided for the elimination of arrears within a period of up to six years.

Since the introduction of the system, six Member States had successfully implemented multi-year payment plans, and the most recent was implemented during the first half of 2012, he said. This latest report contained the status of implementation of the remaining plan, submitted by Sao Tome and Principe in 2002. No new payment plans had been submitted in recent years, although several Member States had indicated they were considering the matter.

Statements

PETER THOMSON (Fiji), speaking on behalf of the “Group of 77” developing countries and China, urged all Member States to fulfil their legal obligations for the expenses of the Organization and pay their assessed contributions in full, on time and without conditions. Some developing countries faced genuine difficulties that temporarily prevented them from meeting their financial obligations and General Assembly decisions should respond to these difficulties. He emphasized the urgency of dealing with the Article 19 issue.

In Assembly resolution 67/238, the Assembly approved the scale of assessments for three years from 2013 to 2015 on the basis of the current methodology, he said. In their 26 September 2013 declaration, the ministers of the Group emphasized that the current methodology used to prepare the scale of assessments reflected the changes in economic conditions of Member States, reaffirmed the principle of “capacity to pay” as the fundamental criterion in the apportionment of the expenses of the United Nations and rejected any change to the elements of the current methodology that would increase developing countries’ contributions.

The core elements of the current methodology had to be maintained and were not negotiable, he said. The current maximum assessment rate, or ceiling, had been fixed as a political compromise and was contrary to the principle of the capacity to pay and a fundamental source of distortion in the scale of assessments. He urged the Assembly to review the arrangement, in accordance with paragraph 2 of Assembly resolution 55/5 C.

Turning to the multi-year payment plan issue, he said the Group appreciated the efforts made by the Member States which had honoured their commitments under this system. The plans should remain voluntary and consider the financial situation of the concerned Member Sates. They should not be used as a way to exert pressure on Member States already facing difficult circumstances, or included as a factor when considering exemption under Article 19 of the Charter.

The Group had carefully reviewed the requests by Central African Republic, Comoros, Guinea-Bissau, Sao Tome and Principe and Somalia for exemption under Article 19, he said. Their inability to make the minimum payments on their assessed contributions was due to conditions beyond their control. The Group endorsed the Committee on Contributions’ recommendation to let these countries vote until the end of the Assembly’s sixty-eighth session and it urged the Committee to act promptly on these countries’ requests.

Finally, the Group noted the Committee on Contributions’ review of Iraq’s request to reduce its rate of assessment for the apportionment of expenses of the United Nations, he said. It endorsed the Contribution Committee’s decision to use the external debt information provided by Iraq to prepare its future scales of assessment.

FRANCESCO PRESUTTI, a representative of the European Union, said Assembly resolution 67/238 laid out the scale of assessments for the 2013-2015 period. In that December 2013 resolution, the Assembly also noted how changes in Member States’ shares of world GNI had led to changes in their relative capacity to pay, which should be more accurately reflected in the scale of assessments. The Assembly recognized that the current methodology could be enhanced, bearing in mind the capacity to pay principle, and also recognized the need to carefully study the methodology in an expeditious manner, while taking Member States’ views into account.

Therefore the Assembly asked the Committee on Contributions to review the methodology’s elements and make recommendations in order to reflect Member States’ capacity to pay, he said. It was to report this information by the main part of the Assembly’s seventieth session. The Organization’s funding was the entire membership’s responsibility, and essential to its sustainability and effective functioning. The current methodology did not sufficiently account for shifting economic realties. There was room for improvement in order to reflect a more equitable distribution of Member States’ financial responsibility, according to their capacity to pay. This year’s review of the methodology by the Committee on Contributions was a welcome step towards enhancing it.

Regarding the requests for exemptions under Article 19, the European Union had constantly stressed that the payment of assessed contributions in full, on time, and without condition was a fundamental duty of all Member States, he said. Yet some Member States faced genuine, temporary difficulties beyond their control that prevented the fulfilment of their annual financial obligations. Multi-year payment plans seemed to be an effective tool to help these countries reduce their unpaid assessed contributions. The European Union was content to endorse the Contributions Committee’s recommendations to let the countries that requested exemptions under Article 19 vote until the end of the Assembly’s sixty-eighth session.

HUSSEIN HANIFF (Malaysia), aligning with the Group of 77 and China, noted that the Committee on Contributions’ report had concluded that the current methodology used for assessment of contributions was valid and took into account prevailing economic conditions. The scale of assessment should be based on the most current, comprehensive and comparable data to reflect the latest GNI. With better data, the Contributions Committee could make better assessments of Member States. He urged States not to make their contributions to the United Nations conditional, stressing their legal obligation to fund the Organization, and noting that Malaysia would fulfil its duty despite the increase of its assessment. At the same time, he underlined the importance of the principle of “capacity to pay”, welcoming the efforts of the Committee on Contributions to improve its methodology for assessment, and stressing the importance of listening to the views of all Member States, especially developing countries. Noting the existence of an “economic gap” between developed and developing countries on the issue of assessment, he called for political will to bridge it, stressing the need for pragmatic, practical approaches to negotiations.

MONDO YAMAMOTO (Japan) pointed out that Japan was the second largest financial contributor to the United Nations. Therefore, it attached great importance to the issue of the scale of assessments. Despite economic and financial difficulties, Japan had paid its dues faithfully. He stressed the importance of assessing contributions on the basis of the “capacity to pay”, and said the changing world economic situation demanded “a methodology that would better reflect each Member State’s real and current capacity to pay in a more equitable way”, based on the most current, comprehensive and comparable data available. He would actively participate in negotiations to find consensus on maintaining the Organization’s future sustainability. Regarding exemptions from payment, he endorsed the Committee on Contributions’ recommendations and urged Member States in arrears to consider submitting multi-year payment plans.

Mr. GREIVER said all of the comments expressed today would be referred to the Committee on Contributions. Many of these comments and ideas had been addressed in its report. They were extremely important and would be taken into account. The Committee on Contributions would cooperate with the Fifth Committee during the information consultations.

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